-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lTHcqZooGmodyIhBi17mWp7eS0tPHvKswnN4tXx3XJTJQjFG3CsQP4mntfpYHMuK UBlA+hXHjuW8569FK8uCPw== 0000031348-94-000004.txt : 19940715 0000031348-94-000004.hdr.sgml : 19940715 ACCESSION NUMBER: 0000031348-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940531 FILED AS OF DATE: 19940712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ECHLIN INC CENTRAL INDEX KEY: 0000031348 STANDARD INDUSTRIAL CLASSIFICATION: 3714 IRS NUMBER: 060330448 STATE OF INCORPORATION: CT FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04651 FILM NUMBER: 94538529 BUSINESS ADDRESS: STREET 1: 100 DOUBLE BEACH RD CITY: BRANFORD STATE: CT ZIP: 06405 BUSINESS PHONE: 2034815751 MAIL ADDRESS: STREET 1: 100 DOUBLE BEACH ROAD CITY: BRANFORD STATE: CT ZIP: 06405 FORMER COMPANY: FORMER CONFORMED NAME: ECHLIN MANUFACTURING CO DATE OF NAME CHANGE: 19820602 10-Q 1 3RD QTR 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark one) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1994 ------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------- ------------- Commission file no. 1-4651 ------- ECHLIN INC. - - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Connecticut 06-0330448 - - ------------------------------------------- ---------------------- (State of incorporation) (I.R.S. employer identification no.) 100 Double Beach Road Branford, Connecticut 06405 - - ------------------------------------------- ---------------------- (Address of principal executive offices) (Zip code) (203) 481-5751 --------------------------------------- (Registrant's telephone number, including area code) - - --------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ---- ---- (APPLICABLE ONLY TO CORPORATE ISSUERS) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of class Outstanding at June 30, 1994 - - -------------------------- ---------------------------- Common stock, $1 par value 59,328,911 ECHLIN INC. INDEX
PART I. FINANCIAL INFORMATION Page - - ------------------------------ ---- Item 1. Financial Statements Consolidated balance sheets at May 31, 1994 and August 31, 1993. 3 Consolidated statements of income for the three and nine months ended May 31, 1994 and 1993 4 Consolidated statements of cash flows for the nine months ended May 31, 1994 and 1993. 5 Notes to consolidated financial statements at May 31, 1994. 6 Item 2. Management's Financial Analysis 7 PART II. OTHER INFORMATION - - --------------------------- Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10
2 PART I: FINANCIAL INFORMATION ECHLIN INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)
May 31, August 31, 1994 1993 ----------- ---------- (unaudited) (A) ASSETS Current assets: Cash and cash equivalents $ 26,049 $ 28,572 Accounts receivable, less-allowance for doubtful accounts of $5,038 and $4,299 288,511 201,177 Inventories, at lower of cost (first-in, first-out) or market: Raw materials and component parts 149,403 137,646 Work in process 66,670 47,985 Finished goods 329,684 302,459 ---------- ---------- Total inventories 545,757 488,090 Other current assets 24,493 21,006 ---------- ---------- Total current assets 884,810 738,845 ---------- ---------- Property, plant and equipment, at cost 798,447 671,741 Accumulated depreciation (379,376) (342,360) ---------- ---------- Property, plant and equipment, net 419,071 329,381 ---------- ---------- Marketable securities 113,625 90,002 ---------- ---------- Other assets 91,504 105,033 ---------- ---------- Total assets $1,509,010 $1,263,261 ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 9,869 $ 3,034 Current portion of long-term debt 2,495 3,658 Accounts payable, trade 140,814 135,569 Accrued taxes on income 50,125 64,053 Accrued liabilities 180,883 150,542 ---------- ---------- Total current liabilities 384,186 356,856 ---------- ---------- Long-term debt 310,679 157,540 ---------- ---------- Deferred income taxes 42,673 35,043 ---------- ---------- Shareholders' equity: Preferred stock, without par value: Authorized 1,000,000 shares, issued none - - Common stock, $1 par value: Authorized 150,000,000 shares, issued 59,323,601 and 59,105,321 59,324 59,105 Capital in excess of par value 329,069 325,865 Retained earnings 427,551 371,963 Foreign currency translation adjustment (41,477) (40,116) Treasury stock, at cost, 270,264 shares (2,995) (2,995) ---------- ---------- Total shareholders' equity 771,472 713,822 ---------- ---------- Total liabilities and shareholders' equity $1,509,010 $1,263,261 ========== ==========
See notes to consolidated financial statements. (A) The balance sheet at August 31, 1993 has been derived from the audited financial statements at that date. 3 ECHLIN INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share data)
Three Months Ended Nine Months Ended May 31, May 31, ---------------------- --------------------- 1994 1993 1994 1993 ---- ---- ---- ---- Net sales $610,034 $519,726 $1,606,451 $1,423,600 Cost of goods sold 426,274 365,492 1,134,949 1,010,866 -------- -------- ---------- --------- Gross profit on sales 183,760 154,234 471,502 412,734 Selling and administrative expenses 123,024 107,675 338,913 309,224 -------- -------- ---------- --------- Income from operations 60,736 46,559 132,589 103,510 -------- -------- ---------- --------- Interest expense 6,512 4,502 16,353 14,773 Interest income 3,141 2,219 8,542 7,950 -------- -------- ---------- --------- Interest expense, net 3,371 2,283 7,811 6,823 -------- -------- ---------- --------- Income before taxes 57,365 44,276 124,778 96,687 Provision for taxes 18,357 14,384 39,929 31,368 -------- -------- ---------- --------- Income before cumulative effect of accounting change 39,008 29,892 84,849 65,319 Cumulative effect of accounting change - - 2,583 - -------- -------- ---------- --------- Net income $ 39,008 $ 29,892 $ 87,432 $ 65,319 ======== ======== ========== ========= Average shares outstanding 59,048 58,688 58,972 58,484 ======== ======== ========== ========= Per share data: Income before accounting change $0.66 $0.51 $1.44 $1.12 Cumulative effect of accounting change - - 0.04 - -------- -------- ---------- --------- Net income $0.66 $0.51 $1.48 $1.12 ======== ======== ========== ========= Cash dividends $0.19 $0.175 $0.54 $0.525 ======== ======== ========== =========
See notes to consolidated financial statements. 4 ECHLIN INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Nine Months Ended May 31, --------------------- 1994 1993 ---- ---- Cash flows from operating activities: Net income $87,432 $65,319 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 50,325 44,836 Cumulative effect of accounting change (2,583) - Changes in assets and liabilities, excluding acquisitions' balance sheets: Accounts receivable (82,378) (34,544) Inventories (28,968) (23,429) Other current assets (3,059) (2,497) Accounts payable 2,460 2,054 Taxes on income (6,646) 18,639 Accrued liabilities 13,097 5,717 Other (816) 6,721 -------- -------- Cash provided by operating activities 28,864 82,816 -------- -------- Cash flows from financing activities: Long-term and short-term borrowings 293,891 199,729 Long-term and short-term repayments (141,616) (189,490) Sale of accounts receivable - 25,000 Proceeds from common stock issuances 3,423 6,697 Dividends paid (31,844) (30,295) -------- -------- Cash provided by financing activities 123,854 11,641 -------- -------- Cash flows from investing activities: Capital expenditures, net (48,394) (29,414) Purchases of marketable securities (23,623) (7,212) Net assets of businesses acquired (83,257) (36,736) -------- -------- Cash used for investing activities (155,274) (73,362) -------- -------- Impact of changes in foreign currency translation on cash 33 (6,166) -------- -------- (Decrease)Increase in cash and cash equivalents (2,523) 14,929 Cash and cash equivalents at beginning of period 28,572 29,832 -------- -------- Cash and cash equivalents at end of period $26,049 $44,761 ======== ========
See notes to consolidated financial statements. 5 ECHLIN INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. - - ------- The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement have been included. Operating results for the nine month period ended May 31, 1994 are not necessarily indicative of the results that may be expected for the year ending August 31, 1994. For further information, refer to the consolidated financial statements and footnotes thereto included in the company's Annual Report on Form 10-K for the year ended August 31, 1993. NOTE 2. - - ------- Fiscal 1993 results have been restated for the Frictiontech Inc. pooling of interests transaction which occurred in June 1993. NOTE 3. - - ------- During February 1994, Echlin acquired Neelon Casting Ltd.(Neelon), located in Canada, for approximately $23,000,000. Neelon is a producer of automotive disc brake rotor castings for the replacement and original equipment markets. The acquisition was accounted for by the purchase method. In October 1993, the company purchased the Hydraulic Brake and Clutch Division of FAG Kugelfischer Georg Schafer A.G., located in Germany, for approximately $59,700,000. In addition, if this acquired operation exceeds certain net income thresholds during the first five years subsequent to the acquisition date, the purchase price will be increased by not more than $14,000,000. The acquisition was accounted for by the purchase method. NOTE 4. - - ------- During the first quarter of fiscal 1994, the company adopted the provisions of Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes." FAS 109 changes the accounting for income taxes from the deferred to an asset and liability method. The cumulative effect of adopting this accounting change was a $2,583,000 increase in net income. 6 ECHLIN INC. MANAGEMENT'S FINANCIAL ANALYSIS Results of Operations: - - ---------------------- Three Months Ended May 31, 1994 vs. Three Months Ended May 31, 1993 - - ------------------------------------------------------------------- Net sales for the three months ended May 31, 1994 increased 17.4 percent while comparable operations increased 8.9 percent over the corresponding quarter of a year ago. Both domestic and foreign comparable net sales increased; 10.0 and 6.0 percent, respectively, over the same three month period of a year ago. Domestic comparable operations increased primarily due to unit volume gains, the impact of price increases and new product sales. Overall domestic net sales performance was strong for all product lines with the largest contributor continuing to be the automotive brake group. Increased foreign net sales were primarily due to the impact of price increases, higher unit volume and the introduction of new products; partially offset by the negative impact of translation. The negative translation impact was a result of the strengthening of the U.S. dollar in relation to the British pound, German mark, Canadian dollar, Mexican peso and South African rand. The quarter's percentage of gross profit to sales increased to 30.1 percent from the prior year's third quarter 29.7 percent. The improvements are primarily attributable to increased domestic and foreign production levels and continued improvements in operational efficiencies. Selling and administrative expenses declined as a percentage of sales to 20.2 percent from 20.7 percent of a year ago. The dollar increase in these expenses is primarily attributed to expense levels generated by current year acquisitions and higher expenses as a result of the increase in sales volume. Net interest expense increased $1,088,000 primarily a result of higher domestic average interest rates and debt levels. Interest income rose due to the growth of our Puerto Rican investment portfolio. Nine Months Ended May 31, 1994 vs. Nine Months Ended May 31, 1993 - - ------------------------------------------------------------------ For the nine month period net sales increased 12.8 percent. Domestic comparable sales improved 7.0 percent due to increases in unit volume and the introduction of new products, in addition to the positive impact of price increases. All product groups reported improvements. Foreign comparable operations are 1.0 percent above the prior year, as the impact of increased unit volume and sales of new products was almost totally offset by the negative effect of translation. The percentage of gross profit to net sales for the nine months increased to 29.4 percent from 29.0 percent a year ago. This improvement is primarily attributable to increased domestic production levels along with continued monitoring of costs. 7 ECHLIN INC. MANAGEMENT'S FINANCIAL ANALYSIS(cont.'d) - - ---------------------------------------- Although selling and administrative expenses are $29,689,000 higher than a year ago for the nine month period, as a percentage of sales they declined favorably to 21.1 percent from 21.7 percent. The dollar increase is primarily due to expense levels from current year acquisitions. Net interest expense rose $988,000 over last year due to higher domestic average interest rates and debt levels. Average debt levels increased due to funds required to acquire new businesses. Net income for the nine months ended May 31, 1994 included income of $2,583,000, which represented the cumulative effect of adopting the provisions of FAS 109, "Accounting for Income Taxes," during the first quarter. Liquidity and Sources of Capital: - - --------------------------------- During the first nine months of fiscal 1994, operations provided $28,864,000 of cash flow as compared to the same period of fiscal 1993 when operations provided $82,816,000. This change reflected a higher level of net income offset by larger cash outflows for working capital items. Accounts receivable were higher due to the increased sales levels while outflows for taxes are up as a result of the company's higher earnings. As a result of the increase in working capital, caused by the growth of existing businesses and the need for funds to acquire new businesses, debt levels rose $152,275,000 from year-end, net of debt assumed in the acquisitions. During the month of June 1994, the company renegotiated its revolving credit agreement (RCA) which was due to expire on September 1, 1994. Under the terms of the new agreement with twelve banking institutions, the company has the availability through September 1, 1999 of maximum borrowings of $375,000,000. The old agreement provided for maximum borrowings of $350,000,000. There are currently no borrowings outstanding under the RCA. Net capital expenditures, which were $18,980,000 above last year, represent outlays for new product development and manufacturing improvements. 8 ECHLIN INC. PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. - - ------------------------------------------ During the quarter ended May 31, 1994, the company did not file any reports on Form 8-K. 9 SIGNATURES ------------ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Echlin Inc. Date: July 12, 1994 Richard A. Wisot ------------- -------------------------- Richard A. Wisot Vice President and Controller Date: July 12, 1994 Jon P. Leckerling ------------- -------------------------- Jon P. Leckerling Vice President, General Counsel and Corporate Secretary 10 -----END PRIVACY-ENHANCED MESSAGE-----